"We are extremely pleased to report our fiscal year 2013 financial results," said Patti Hart, CEO of IGT. "We continue to drive significant revenue and earnings per share growth through the successful execution of our strategy and disciplined approach to capital allocation. Our goal, as always, is to maximize our returns to shareholders through targeted share repurchases, consistent dividends and robust earnings growth."

Consolidated Results

Periods Ended September 30,

Fourth Quarters

Years

2013

2012

% Change

2013

2012

% Change

($ in millions, except per share amounts)

GAAP Measures

Revenue

$ 632.3

$ 631.1

0%

$ 2,341.6

$ 2,150.7

9%

Operating income

123.4

108.3

14%

494.1

421.7

17%

Income from continuing operations

63.5

90.1

-30%

272.7

249.7

9%

Earnings per share from continuing operations

$0.24

$0.33

-27%

$1.03

$0.86

20%

Net operating cash flows

$ 462.6

$ 446.5

4%

Non-GAAP Measures

Adjusted operating income

$ 148.2

$ 188.6

-21%

$ 603.5

$ 563.8

7%

Adjusted income from continuing operations

79.8

101.9

-22%

336.7

301.1

12%

Adjusted earnings per share from continuing operations

$0.30

$0.38

-21%

$1.27

$1.04

22%

Free cash flow

$ 334.8

$ 237.8

41%

Adjusted operating income, adjusted income from continuing operations, adjusted earnings per share from continuing operations and free cash flow are non-GAAP financial measures. Reconciliations between GAAP and non-GAAP measures are provided at the end of this release.

Fiscal 2013 revenues increased 9% to $2.34 billion, primarily driven by North America growth in social gaming and machine sales.

For fiscal 2013, North America revenue increased 12% to $1.84 billion and international revenue was flat at $507 million.

Revenues decreased 6% to $247 million in the fourth quarter primarily due to lower North America MegaJackpots® revenue.

Gross margin increased to 63% from 61% compared to the prior year quarter, primarily due to lower jackpot expenses and depreciation.

Installed base decreased primarily driven by a decline in North America MegaJackpots® units.

Average revenue per unit per day in the quarter was $48.78, down 4% over the prior year quarter primarily due to lower MegaJackpots® yields and up 2% sequentially reflecting positive international trends.

Product Sales

Periods Ended September 30,

Fourth Quarters

Years

2013

2012

% Change

2013

2012

% Change

($ in millions, unless otherwise noted)

Revenue

$ 312.2

$ 313.4

0%

$ 1,085.2

$ 966.8

12%

Gross profit

155.7

174.3

-11%

565.0

522.3

8%

Gross margin

50%

56%

-10%

52%

54%

-4%

Machine units recognized ('000)

18.8

14.5

30%

57.2

43.6

31%

Machine average sales price ('000)

$ 11.6

$ 15.0

-23%

$ 13.2

$ 15.0

-12%

Revenues were relatively flat for the quarter, and up 12% to $1.09 billion for the year primarily due to increased North America machine sales largely related to Canadian VLT sales and higher systems installations.

Gross margin decreased to 50% from 56% while average machine sales prices declined to $11,600 in the fourth quarter, due to targeted promotional activity and product mix.

Social gaming revenues increased 72% to $61 million in the fourth quarter compared to the prior year quarter, primarily driven by an increase in both average DAU and bookings per DAU.

Average DAU were 1.7 million, an increase of 20% over the prior year quarter.

Average MAU were 6.7 million, an increase of 32% compared to the prior year quarter.

Average bookings per DAU was $0.40, an increase of 43% over the same quarter last year.

Operating Expenses

Periods Ended September 30,

Fourth Quarters

Years

2013

2012

% Change

2013

2012

% Change

($ in millions, unless otherwise noted)

Operating Expenses

Selling, general & administrative

$ 135.3

$ 106.7

27%

$ 460.4

$ 410.4

12%

Research & development

62.7

59.6

5%

235.0

217.0

8%

Depreciation & amortization

19.4

21.1

-8%

77.4

76.9

1%

Contingent acquisition-related costs

15.3

31.3

-51%

73.9

69.1

7%

Impairment and restructuring

0.4

42.5

*

3.6

42.5

*

Total operating expenses

$ 233.1

$ 261.2

-11%

$ 850.3

$ 815.9

4%

Adjusted Operating Expenses

Total

$ 210.6

$ 182.7

15%

$ 745.1

$ 679.6

10%

Adjusted operating expenses is a non-GAAP financial measure. Reconciliations between GAAP and non-GAAP measures are provided at the end of this release.

Fourth quarter operating expenses decreased over the prior year quarter primarily due to decreases in impairment and acquisition-related charges, partially offset by increases in SG&A and R&D.

SG&A increased over the prior year quarter primarily due to increased advertising expenses in correlation with growing social gaming revenues, the shift in timing of G2E 2013, and additional head count. Higher professional fees, bad debt provisions, and a legal settlement also contributed to the increase.

Fiscal year operating expenses improved to 36% of revenues compared to 38% in the prior year.

Balance Sheet and Capital Deployment

September 30,

2013

2012

% Change

($ in millions, unless otherwise noted)

Cash and equivalents (including restricted amounts)

$ 809.1

$ 288.2

181%

Working capital

267.5

633.0

-58%

Contractual debt obligations

2,150.0

1,790.0

20%

Cash and contractual debt obligations both increased during the quarter driven by the issuance of $500 million, 5.35% bonds due 2023. The company intends to use the net proceeds to redeem a portion of its convertible notes due May 2014 and for general corporate purposes.

Working capital decreased primarily due to the reclassification of our convertible notes due May 2014 from non-current to current liabilities, partially offset by increased cash from the new long-term debt issuance.

During the quarter, the company announced its fourth consecutive quarterly cash dividend increase, up 67% compared to the same quarter last year.

During fiscal 2013, the company returned $270 million in the form of dividends and share repurchases to its shareholders.

OtherReferences to per share amounts in this release are based on diluted shares of common stock, unless otherwise specified.

OutlookBased on current expectations, the company is providing its initial fiscal year 2014 guidance for adjusted earnings from continuing operations of $1.28 to $1.38 per share.

GAAP earnings per share from continuing operations for fiscal year 2014 will include acquisition-related expenses, primarily related to DoubleDown, the amount of which is not determinable at this time. The company may also recognize other items that are not currently determinable, but may be significant. For this reason, the company is unable to provide estimates for full-year GAAP earnings per share from continuing operations at this time.

Earnings Conference CallAs previously announced on October 29, 2013, IGT will host a conference call to discuss its fourth quarter and fiscal year 2013 earnings results on Thursday, November 7, 2013, at 10:30 a.m. PST (or 1:30 p.m. EST). The access numbers are as follows:

The conference call will also be broadcast live over the Internet. A link to the webcast is available at the IGT website: http://www.IGT.com/investors. The call will be archived until Thursday, November 21, 2013 at http://www.IGT.com/investors, for those interested parties that are unable to participate during the live webcast.

A taped replay of the conference call will be available after the conference call. This replay will run through Thursday, November 21, 2013. The access numbers are as follows:

This press release contains forward-looking statements that involve risks and uncertainties. These statements include our expected future financial and operational performance (including our guidance for fiscal year 2014), our strategic and operational plans, and repurchases of our common stock under the proposed accelerated stock repurchase transaction. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the results predicted, and reported results should not be considered an indication of future performance. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions and changes in economic conditions affecting the gaming industry; new or changing laws or regulations or new interpretations of existing laws or regulations affecting our business; difficulties or delays in obtaining or maintaining necessary licenses or approvals; slow growth in the number of new gaming jurisdictions or new casinos or the rate of replacement of existing gaming machines; changes in operator or player preferences for our products; our ability to compete in the gaming industry with new or existing competitors; our ability to develop and introduce new products and their acceptance by our customers; risks related to our international operations; our ability to protect our intellectual property; adverse results of litigation, including intellectual property infringement claims; risks related to business combinations, investments in intellectual property and the integration of acquisitions; and future developments or changes affecting online gaming or social casino-style gaming, which is a new and evolving industry. A further list and description of these and other risks, uncertainties and other matters can be found in our annual report and other reports filed with the Securities and Exchange Commission, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for fiscal 2012 filed with the SEC on November 28, 2012 and our Quarterly Report on Form 10-Q for our fiscal quarter ended June 30, 2013 filed with the SEC on August 2, 2013 and available on the SEC website at www.sec.gov and on the investor relations section of our website at www.IGT.com/investors. Additional information will also be set forth in our Annual Report on Form 10-K for our 2013 fiscal year, which we expect to file with the SEC in the fourth quarter of calendar 2013. All information provided in this release is as of November 7, 2013, and IGT does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances.

We believe that certain non-GAAP financial measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating our operating performance. Non-GAAP information is used to evaluate business performance and management's effectiveness. These measures should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures may not be calculated in the same manner by all companies and therefore may not be comparable.